On March 14, 2008 the Government House Leader announced the appointment
of Kevin Page as Canadas first Parliamentary Budget Officer. The Office
is intended to strengthen the capacity of Parliament to better hold government
to account by increasing transparency in the Governments fiscal planning
framework and improving scrutiny of the estimates. This article outlines
the mandate of the Office and the appointment process. It concludes with
some thoughts about the future of this new parliamentary office.

The creation of a Parliamentary Budget Officer is arguably one of the most
radical parliamentary reforms in Canadian history. A World Bank-OECD survey
in 2003 identified only eleven countries with budget research organizations
attached to their legislatures. Most have a congressional system of government
where the legislative branch is able to propose its own expenditures or
taxes.

The bench mark, of course, is the Congressional Budget Office in the United
States, established in 1974, with an estimated staff of 230 professionals.
Korea established a National Assembly Budget Office in 2003, with a staff
of 92. The Philippines created the Congressional Planning and Budget Department
in 1990, with a staff of approximately 50 people.1

Among Westminster model Parliaments the United Kingdom established a Scrutiny
Unit in 2002, within the Committee Office of the House of Commons, to provide
advice on expenditures and draft bills. This Unit has a staff of seven
professionals, seconded from other organizations. To date the main focus
of this unit appears to be improvements in the presentation of information
from the Treasury to improve the ability of members to discuss the estimates.2

Background

For years Canadian parliamentarians have been concerned over the divergence
between the fiscal forecasts of the Department of Finance contained in
the budget and the actual numbers at the end of the fiscal year. A 1994
review of the Finance Department by Ernst and Young resulted in some improvements
to the methodology, however, their recommendation to establish an independent
forecasting agency to provide economic and fiscal policy forecasts was
ignored.

Budget balance projections have been too low in each of the last ten years
by an average of over $10 billion

Total revenues were under-forecast in seven of the last eight years but
their contribution to budget balance under-forecasts has been quite modest
in recent years.

Total program expenditure projections have more consistently contributed
to the budget balance under-forecasts, having been on the high side in
all but one of the last ten years.3

Among his recommendations Dr. ONeill proposed the creation of an agency
within government with a mandate to focus on the medium-to-long term fiscal
implications of structural and demographic factors. He suggested the office
be attached to either the Library of Parliament, the Office of the Auditor
General or accountable to the House of Commons Standing Committee on Finance.

The 2006 Election Platform of the Conservative Party proposed creation
of an independent Parliamentary Budget Authority to provide objective analysis
directly to Parliament about the state of the nations finances and trends
in the national economy. This commitment led to inclusion of a Parliamentary
Budget Officer in Bill C-2, the Accountability Act, the first item of business
introduced by the new government in April 2006.

From Bill to Act

The Accountability Act underwent extensive amendments during hearings before
a Legislative Committee of the House in May and June 2006 and the Senate
Standing Committee on Legal and Constitutional Affairs from July to November
2006. The provisions relating to the Parliamentary Budget Office were only
a small part of the Act and by no means the most controversial. Nevertheless
a number of amendments were made.

When William Young, the Parliamentary Librarian, appeared before the Senate
Committee on Legal and Constitutional Affairs he said he was satisfied
that certain changes to the original bill had clarified the working relationship
between the Parliamentary Librarian and the parliamentary budget officer.

However he was concerned that Bill C-2 contained no provision assuring
the PBO of access to government data without charge.

To put it simply, if we have to pay the normal costs of, for example, Statistics
Canada data sets, this could easily impose an unreasonable financial burden
on the new office and, therefore, on the library as a whole. It is easy
to argue that we could simply put forward a request for additional funds
to the two Speakers, but this would always be after the fact and it would
inevitably involve trade-offs against the other needs of the library and
other services that you, as parliamentarians, are entitled to from the
library. Again, the risk is that our service to members could be too easily
impaired by this unpredictable need for funds. A better solution, surely,
would be to have the bill offer the same clarity with respect to access
that is provided for in respect to other officers of Parliament. In particular,
I would like to cite as an example the Auditor General Act, which provides
that access to government data should be given to the Auditor General at
no charge.4

The Senate Committee added the words free and timely to section 79.3(1),
to qualify the access to financial information which must be provided to
the PBO by departments. This amendment was accepted by the House.

Another Senate amendment removed a subsection that would require the PBO
to estimate the financial costs of private members bills. Instead he will
only cost any matter that falls within the jurisdiction of Parliament if
requested by a member of a committee. This amendment was accepted by the
House.

A Senate amendment not accepted by the House related to the appointment
process. The Senate Committee wanted some Senate input into the selection
process whereas the bill originally provided that the appointment be made
by the Government House Leader from a list of three nominees from a committee
chaired by the Parliamentary Librarian.

Some other relatively minor amendments such as increasing the term of the
officer from three years to five years were made. But the most significant
change was in regards to the estimates process.

On May 16, 2006 Robert Marleau, former Clerk of the House of Commons, appeared
before the Legislative Committee. He outlined the problem parliamentarians
have in trying to scrutinize the estimates and the various attempts that
have been made to address this issue over the years. He recommended:

That you consider that as part of this bill, adding a second mandate of
that office within the library, to capture the estimates process. The committees,
I believe, as Ive advocated publicly and privately, require substantive
support by a financial analysis office in order to help the committees
do a proper job on the study of estimates. This amendment to the bill has
the potential to bring Parliament back into the accountability loop.5

Following the testimony by Marleau and other experts a new section, 79.2
of the Parliament of Canada Act, was added. It states that, in addition
to providing budget-related analysis and estimates-related analysis to
the Senate and the House of Commons, the PBO will provide such analysis,
on request, to the following three committees or their equivalents: the
Standing Senate Committee on National Finance, the House of Commons Standing
Committee on Finance, and the House of Commons Standing Committee on Public
Accounts. The PBO will also provide estimates-related research and analysis
on request to any parliamentary committee mandated to consider estimates.

This constituted a major expansion of the mandate originally envisioned
by the Accountability Act.

The Appointment Process and the Mandate

As adopted the Accountability Act provides that the Governor in Council
may select the Parliamentary Budget Officer from a list of three names
submitted in confidence, through the Leader of the Government in the House
of Commons, by a committee formed and chaired by the Parliamentary Librarian.

It took some time to recruit a suitable candidate and in February 2008
the Senate Committee on National Finances called the Parliamentary Librarian
to enquiry on the status of the process. He noted that a job description
for the officer was forwarded for approval and classification to the Privy
Council Office in December 2006. The Librarian convened a discussion group
in January 2007, nominated by the Canadian Association of Former Parliamentarians,
and representatives of all parties in both Houses. He also recruited Allan
Darling, a retired official as a senior adviser to help define the skills
and experience that candidates should possess.

In late July, 2007, I received notification that the position had been
classified as a GCQ5. This classification is roughly equivalent to an EX3,
normally a director general level in the public service. Following a competitive
bidding process, the Library of Parliament contracted with the executive
search firm, Ray and Berndtson, on August 28, 2007. They conducted an exhaustive
national search process for qualified candidates. On November 30, I convened
the selection committee required by the statute to review eight of the
24 candidates that had been identified through the search process. At that
time, the committee identified an additional six candidates to be approached
for the position. The committee held interviews on December 20 and, on
its behalf, I forwarded the committees recommendations to the Government
House Leader on December 21, 2007.6

There were a couple of problems involved in finding the right candidate.
One was the few number of qualified individuals. Another was the classification
level established by the Privy Council Office as GCQ5, which is equivalent
to an EX3, normally a director general level in the public service. Some
candidates felt that an appointment at that level would reduce their credibility
in interacting with the senior levels of the bureaucracy whose working
levels were at least at the EX4 level.

Senator Ringuette said:

I am puzzled about the classification of this position because this person
will be an officer of Parliament. The Parliamentary Budget Officer essentially
provides services to Parliament in the same way as the Auditor General.
I understand that the scope of the mandate is not as big. However, for
the Privy Council to classify this position as a director general position
is an insult to the kind of service that parliamentarians are seeking from
this officer. I voice my support, along with my colleagues, in regard to
ensuring that we get the right person to do the job for us, and that the
compensation package is commensurate with the skill set.7

The Parliamentary Librarian also appeared before the House of Commons Finance
Committee in February 2008 and the questions went well beyond the appointment
process.

In describing the role of the Parliamentary Budget Officer the Parliamentary
Librarian said:

I do not think the PBO should provide an alternative fiscal forecast to
the one produced by the Department of Finance. Several reputable Canadian
forecasting firms already do this, and adding yet another forecast would
not improve service to parliamentarians. I foresee the PBO taking a lead
role with parliamentarians to provide a much more strategic approach that
would enhance parliamentarians understanding of the underlying factors
affecting fiscal forecasting and the reasons the executive is moving in
a particular direction. I anticipate that the work of the PBO would focus
on higher-level analysis that would improve parliamentarians understanding
of alternative public policy options that might influence future government
expenditures.8

This led to concerns over the independence of the Officer. John McKay of
the Liberals noted that the Department of Finance gives fiscal forecasts.
They are beholden to the Minister of Finance. The Bank of Canada gives
monetary forecasts. It uses the same numbers, but its for monetary purposes.
He added:

Parliamentarians were frustrated, both in the last parliament and in this
parliament, that there was no independent entity that spoke, if you will,
for parliamentarians. And now what we find out is that were not going
to get an alternative voice; were simply going to get a rehash of the
numbers that are already in the public domain  either from independent
forecasters, from the Bank of Canada, or from the Department of Finance.9

The Committee then turned its attention to the question of classification
and questioned officials of the Privy Council Office. Marc OSullivan,
Assistant Secretary to the Cabinet for Senior Personnel and Special Appoints,
explained that the appointment of the Parliamentary Budget Officer was
particularly challenging because of two main issues.

On the one hand there was a desire to have this position classified at
the most senior level possible. Its an important position and function
and you would want it to be as senior as possible. On the other hand it
fits within an existing structure. Under the legislation the parliamentary
budget officer is an officer of the Library of Parliament, so this person
answers to the parliamentary librarian. That tells you something about
where its placed in terms of classification. With classification you dont
look at one position independently; you look at it in relation to other
positions within that organization. There was a bit of a ceiling that we
were dealing with in terms of classification of the parliamentary librarian
position.

We considered the possibility of completely disregarding the relativity
with other positions and just classifying it at the level we thought was
right. But there are nine other Governor in Council positions within Parliament,
and if we did away with relativity for the purposes of this position, then
we could imagine that the nine other positions would ask to be reclassified
as well. People expect to be reclassified upwards, not downwards. We would
have had an impact on nine positions, which may not be a good idea from
the perspective of taxpayers.

In light of those two competing pressures, we came up with a classification
of one level below the level of the Parliamentary Librarian. Because of
the function of the Budget Officer, we thought it was important to give
it an additional level of independence that is not subject to performance
pay; that is, the Governor in Council wont be determining performance
pay for that position. It was put in a range called the GCQ range Q,
as in quasi-judicial function  in order to afford it that level of independence.
It ended up being classified at the level of GCQ-5, which is just below
the equivalent for the Parliamentary Librarian, who is a GC-6.10

Thomas Mulcair of the NDP suggested the PCO was frustrating the will of
Parliament by delaying the appointment while it considered the classification
issue and then subsequently recommending a level that was causing problems
in recruiting an appropriate individual.

Mr. OSullivan rejected such a suggestion.

This is not a decision made by the government, but an inherent aspect of
the parliamentary structure.11

Analysis and Reaction

Concerns expressed during the process leading up to the appointment of
the first Parliamentary Budget Officer are of three types. They relate
to independence, mandate and work load.

As far as the independence of the Parliamentary Budget Officer is concerned
it would appear that despite the normal political suspicions particularly
rampant in a minority parliament, the attachment of the Officer to the
Library of Parliament will guarantee his independence. The Library, like
the Chief Electoral Office and the Office of the Auditor General, is a
bastion of non partisanship. Although the appointment process was rather
unique it was, if anything, more transparent than the normal process for
senior appointments. In the final analysis even independent officers such
as the Auditor General are appointed by the Government. The issue of classification
as a possible limit on independence appears to have been worked out to
the satisfaction of all parties.

The question of mandate is more difficult. The ultimate scope of the job
will depend on what parliamentarians want the Budget Officer to do. It
is pretty clear that Opposition members will push for a fearless official
who will challenge projections and assumptions of the Department of Finance.
Government members will be looking more for a facilitator who can help
MPs interpret what Finance is doing.12 The PBO risks being caught in the
middle.

The task of predicting government surpluses or deficits is hardly an exact
science. Ten highly competent economic forecasters may come up with ten
different projections. Even more difficult is detecting, exposing and proving
that a forecast may be politically motivated for short term electoral advantage.
Ontario has some experience with pre-election forecasts that proved to
wildly inaccurate and as a result the Fiscal Transparency and Accountability
Act was passed in 2004. It gave the Ontario Auditor General the task of
reviewing and reporting on the reasonableness of the governments pre-election
report on the provinces finances. The resulting document,13 will probably
become a model for the type of work that can be reasonably done by a Parliamentary
Budget Officer. But forecasting is only one part of the mandate.

The costing of bills is another part of the mandate although it was changed
from the original proposal relating to private members bills. It remains
to be seen how the rather vague provision allowing him to cost any matter
that falls within the jurisdiction of Parliament will be interpreted and
if such requests will completely overwhelm the office. This is potentially
a huge task for an office with a projected budget of $2.7 million and a
staff of 15.14

The Parliamentary Librarian referred to this issue when the Bill was being
considered by the Senate Committee.

By opening the door for the PBO to be required to respond on virtually
any matter of interest to any senator or member of the House in their various
capacities, invites more work for this new PBO function than might be reasonable.
It risks frustrating the intentions and expectations of Parliamentarians
on all sides. Accordingly, I would recommend that requests for work by
the parliamentary budget officer with respect to proposals be subject to
such rules and procedures as may be established by each chamber, perhaps
on the recommendation of the Standing Joint Committee of the Senate and
the House of Commons on the Library of Parliament. Alternatively, requests
could be channelled through a relevant committee of each House. Either
alternative would leave decisions on priorities to parliamentarians and
not to those in the library, whose job is to serve them.15

In a minority Parliament the opposition parties, when united, control the
agenda and if so inclined they can fill the order paper with bills the
government might not like. Recent examples of such Bills, C-253 (To provide
that contributions to a Registered Education Savings Plan are deductible
from a taxpayers taxable income) and C-377 (An Act to ensure Canada assumes
its responsibilities in preventing dangerous climate change) are examples.
Both had serious issues relating to costing yet one wonders if the real
problems were more a reflection of political differences. Would a cost
estimate accompanying either bill have led to different results?

The task of scrutinizing the estimates is an even more intimidating part
of the mandate. Parliament exercises the power of the purse by reviewing
the annual Main Estimates for government spending (normally tabled in the
spring of each year). Before 1968 these were considered by Committee of
the Whole and put to a vote. The debate was often an opportunity for obstruction
and during minority parliaments sometimes it appeared as though the governments
authority to pay bills would be delayed. This led to a complete reform
and since 1968 estimates have been sent to standing committees which have
the authority to do one of the following:

Remain silent, in which case the estimates are deemed adopted by May 31;

Report the estimates without amendment, in which case the House proceeds
as above;

Adopt reductions to estimates, or reject them, in which case the House
considers these changes and either adopts changed estimates or restores
the initial amounts.

Although these reforms were intended to improve the substantive review
of government spending in committee and streamline debate on the estimates,
in fact successive committee reports have expressed continuing dissatisfaction
with the estimates process.

The Standing Committee on Procedure and House Affairs concluded in 1998
that  the vast sums of money spent by government are subjected to only
perfunctory parliamentary scrutiny, and made 52 recommendations for wide-ranging
change (Catterall-Williams Report).

A follow-up report in 2000 by the same Committee continued to call for
changes, notably improvements to information and enhanced staff support
(Szabo Report).

In 2001, the Special Committee on the Modernization and Improvement of
the Procedures of the House of Commons proposed the consideration of two
sets of estimates by Committee of the Whole as a partial remedy for what
it saw as long-standing deficiencies in the handling of estimates (Kilger
Report).

A 2003 report of the Standing Committee on Government Operations and Estimates
concluded that, despite progress in recent years, most parliamentary committees
continued to give departmental estimates relatively cursory attention,
and that strengthened scrutiny was urgently needed (Valeri Report).16

More recently, the Phase II Report of the Gomery Commission recommended
a substantial increase in funding for parliamentary committees, as a response
to longstanding concerns about the effectiveness of committees in examining
government programs and spending estimates. Justice Gomery argued that
strengthened staff support for committees is a key ingredient for improved
effectiveness.

In 2004, responding to these reports, the Library of Parliament sought
and received supplementary funding to hire 3 analysts with skill sets that
could contribute to strengthened support for committees doing estimates-related
program studies. The three analysts hired brought experience at Finance
Canada, Treasury Board Secretariat and the Office of the Auditor General
to the Library. They became members of an internal working group known
as the estimates cluster created for the purpose of broadly enhancing the
capacity to support estimates work of the teams of analysts assigned to
committees of the Senate and House of Commons. Thus the PBO will have some
immediate help available to fulfill this part of his mandate.

Related to the estimates issue is the question of access to information.
Paul Crête of the Bloc, wanted to know what restrictions will the Parliamentary
Budget Officer face in obtaining information from the government?

Will he have authority to obtain any information he asks department officials
for? Will confidentiality measures be applied? What legislative or regulatory
framework will govern that issue? If arbitration becomes necessary, who
will be responsible for it? If the Parliamentary Budget Officer wants some
item of information but the department does not want to give it to him,
who decides the issue? Will the Parliamentary Budget Officer have the right
or the opportunity to file an appeal in such cases?17

According to Joe Wild of the PCO there are certain limits on what the Parliamentary
Budget Officer can request. First, he can only ask for what would actually
relate to the discharge of the mandate. The second limit is that it must
be for financial or economic data in the possession of the department.
But that data cannot include personal information as defined under the Access to Information Act, or confidences of the Queens Privy Council.
That information is out altogether.18

Also excluded is information the government has obtained in confidence
from a foreign government or a provincial government; information that
would be injurious to federal-provincial affairs; information relating
to trade secrets that would harm the economic position of the Government
of Canada; or information that is commercial, confidential, or received
from third parties.

The Act does not set out an appeal mechanism or anything like that. It
prescribes a limit on the authorities of the Parliamentary Budget Officer
to obtain information. It is ultimately a question between the department
that has been asked to give the information and the parliamentary budget
officer as to whether or not the information being requested falls under
the information that is not to be provided from the two categories I mentioned:
personal information and cabinet confidences. On the other body of information
I was talking about, the Parliamentary Budget Officer can receive it but
simply isnt in a position to disclose it unless the disclosure is necessary
for the discharge of the mandate. He is just meant to treat it in a confidential
manner. Ultimately, its going to be a discussion between those two parties.
If theres disagreement, if the Parliamentary Budget Officer wanted to
insist on receiving the information, because it is a law it could go through
lawyers or to the Federal Court, to get the interpretation of a judge.19

Conclusion

It will take some time to evaluate the impact of the Parliamentary Budget
Officer on the operation of Parliament. Sharon Sutherland of the University
of Ottawa has expressed concern about the impact of the Office on existing
parliamentary bodies including the Library of Parliament. She worries it
will divert the Librarys attention and could tarnish its gold standard
reputation as the single-most respected, non-partisan source of information
we have.20 At the very least it will force a rethinking of how the Library
distributes limited resources among PBO projects and other traditional
Library tasks.

If this experiment succeeds we may see PBO officers (or their equivalent)
in many provincial legislative assemblies. Certainly students of parliamentary
government in Canada and abroad will be watching to see how this Office
evolves over the next few years.

Notes

1. Allan Darling, Role of the Parliamentary Budget Officer, Speech to the
Financial Management Institute, November 28, 2006.

2. Ibid.

3. Tim ONeill, Review of Canadian Federal Fiscal Forecasting: Processes
and Systems, Document tabled in the House of Commons, June 20, 2005

5. See House of Commons, Legislative Committee on Bill C-22, Minutes of
Proceedings and Evidence, May 16, 2006.

6. Senate, Standing Committee on National Finance, Minutes of Proceedings
and Evidence, February 12, 2008. The selection board considered of Maria
Barrados, the President of the Public Service Commission, Don Drummond,
the Senior Vice-president and Chief Economist of TD Bank, Bill Knight,
the former commissioner of Consumer Financial Institutions, Allan Darling,
Senior Special Advisor the Parliamentary Librarian and William Young.

7. Senate, Standing Committee on National Finance, Minutes of Proceedings
and Evidence, February 12, 2008.

8. House of Commons, Standing Committee on Finance, Minutes and Proceedings,
February 13, 2008.

9. Ibid.

10. Ibid.

11. Ibid.

12. See comments by David Smith, Sharon Sutherland and other experts in Ottawa Citizen, March 31, 2008.

13. See Office of the Auditor General of Ontario, The Auditor Generals
Review of the 2007 Pre-Election Report on Ontario Finances, Toronto, 2007.